When you need to come up with money quickly, stress can corner you into making poorly informed decisions. An installment loan can be a great way to get your bills paid and getting life back on track, but only if you have some idea of what you’re doing. Here are three important things to know before pursuing one of these loans.
1. Installment vs. Payday Loans and Revolving Credit
If you need extra money, installment loans Mississippi options allow you to receive a loan and repay the money in a fixed amount each month. You can use an installment loan for a wide variety of needs, including for repairs, home appliances or even a personal vacation. The typical time frame for repayment is from 6 to 18 months.
Payday loans have a single payment date, generally on the borrower’s date of pay. They have a bad reputation for predatory lending practices and are illegal in many places because of extraordinarily high interest rates and other fine print that can land borrowers in deep debt, fast.
With revolving credit, the borrower gets a new line of credit that can be drawn upon each month. That means that if you spend $200 one month and pay it off, you can spend another $200 the next month. The problem with revolving credit is that it invites people to spend more money over time, whereas an installment loan is typically used for a one-time cost or bill.
2. Refinancing Options
Many people don’t realize that if you do need access to more cash before you complete payment on an installment loan, you can often qualify for an additional loan through refinancing. Typically, this involves getting a new loan for the amount of the original loan plus the extra amount you need. The new loan is then used to pay off the original amount and you get to use the remaining amount on the new loan for your various needs.
3. Credit Eligibility
For many, the greatest worry about getting a loan is credit score. Most lenders that offer this type of loan understand that those seeking them usually don’t have perfect credit, and will work with you to find a financial solution that fits your needs. If you have an expense or accumulation of debt that you need to pay off, consider an installment loan. Don’t be afraid to schedule a consultation with an expert if you think this option might be for you.